Hyundai, tech fuel Asia stock gains

Hong Kong: Stocks staged a comeback across most of Asia on Thursday as a larger-than-expected profit from Korea’s Hyundai fed optimism that the auto sector could be nearing a turnaround and tech shares found strength on the back of buoyant earnings from Apple.

European shares were more subdued in early trading with major indexes slightly lower.

The turnaround in Asian equities took the wind out of an earlier rally in government bonds, gold and Japan’s yen that was fuelled by a weakening outlook for the global economy.

A surprisingly large profit from Credit Suisse eased some of the concern over credit losses at global banks that had flared again following a big loss from Morgan Stanley and a report that top Japanese broker Nomura had also fallen deeply into the red.

Credit Suisse’s first-quarter profit was about twice what was expected, and it said it remained optimistic about its prospects..

While Hyundai’s profit fell, it managed to gain global market share and analysts said efforts by global governments to stimulate growth would give the sector a lift later this year.

Car makers are suffering their worst-ever downturn and investors are edgy about the future of General Motors and Chrysler, which are being kept afloat by US government loans. Chrysler has until the end of this month to arrange a turnaronud, while GM has until 1 June.

“Today’s gains are all about results ... we have had quite solid set of earnings reports lately and tomorrow Samsung Elec is said to be set to post quite a strong operating profit,” said Y S Rhoo, a market analyst at Hyundai Securities in Korea.

Samsung gained nearly 3% in step with the tech sector following Apple’s earnings, which were lifted by strong sales of iPods and iPhones.

Futures on the Nasdaq 100 were up more than 1%, pointing to more gains in the group when the US session gets underway.

In Japan, Pioneer jumped more than 23% after a company source said Honda Motor Co was finalising plans for a big investment in the electronics maker. Honda rose 1.7%.

Asia’s equity gains came against the headwinds of the latest grim report on the global economy from the International Monetary Fund.

The IMF slashed its forecasts for every major country and predicted worldwide gross domestic product would contract by 1.3% this year, marking the deepest post-World War Two recession by far.

Still, Asia’s rally was not matched in Europe, where early action had most major indexes down about half a percent. The pan-European FTSEurofirst 300 was off by 0.4%.

Credit Suisse shares were a bright spot, gaining 6.5%.

Japan’s Nomura Holdings also rallied back from a 4% drop to finish unchanged. It had been dragged lower after the Nikkei business daily reported the broker may post a loss of more than $7 billion for the year ended in March.

The country’s second-largest bank, Mizuho Financial Group, estimated after the close that it would report a loss of about $6 billion for 2008/09.

Investors remain sceptical toward the financial sector ahead of the release of US bank stress tests on 4 May. The tests were designed to see how the country’s largest banks would fare if the US recession proved unexpectedly severe.